Archive for May, 2009

A dominant incumbent is a dominant incumbent because they’ve been doing something really well. It’s hard to beat them at their own game… so you have to change the game.

For example, Blackberry is trying to sell their new consumer device using the same kind of "lifestyle sexiness" as Apple.

Are they really going to out-sexy Apple?

Nope.

It would be better if Blackberry changed the game… maybe used facts as a basis to get across marketing message.

For example, how about a stark white ad flashing a few "hot button" facts… such as:

Speed of mail delivery…

… Apple iPhone: 15-30 minute lag

… Blackberry: INSTANT.

This doesn’t apply to just marketing messages… but distribution, too. Borders and Barnes & Noble pretty much had 100% of the book market distribution locked up… then along came Amazon… and they used the Internet to change the game.

But, for the last few months, I’ve been telling folks that I thought the average U.S. consumer — the same consumer that drives 2/3rds of the U.S. economy — the same economy that sparks the rest of the world — was actually better off today than a year ago…

… primarily because oil at $30-$60 a barrel — vs. $150 (or, God help us, $200) — affects the U.S. consumer way more dramatically than just about everything else broken out there.

Two recent data points support this: Last week’s Lowes’ results (Lowes is home improvement)… and today’s jump in consumer confidence. Both wouldn’t have happened if the average U.S. consumer was actually, truly worse off.

So here’s the flag: Watch out for oil prices.

If oil continues to climb — and it’s almost doubled in the last few months — I think that could cause more consumer trouble than all the other bad stuff that may happen.

Like last time, I think $100 a barrel is the negative tipping point.

Update: Stephen Schork, editor of The Schork Report, which comments a lot on oil, recently said his tipping point is $75… at that price, gas is $3 a gallon… and at that price, that’s when the Federal Highway Administration says drivers start scaling back, which means at $3 a gallon, the U.S. consumer isn’t feeling so good any more. Which (with oil at between $75 and $100) makes me not feel so good any more about this market. Watch out for the price of oil.

Update: Another noted economist, Nouriel Roubini, weighs in about the dangers of $100 oil.